FALLS CHURCH, Va., July 8, 2015 /PRNewswire/ -- Azzad Asset Management, advisor to the Azzad Funds and sponsor of the Azzad Ethical Wrap Program, announced today that its Muslim clients are expected to donate a record amount of money this year in order to fulfill their religious obligation of Zakah, or giving in charity a certain percentage of one's wealth.
The Islamic investment firm calculates that nearly $3.2 million will be given in mandatory charitable giving, with an additional $500,000 in purification dues. The amounts are determined using proprietary software and reported to clients in an annual statement. Clients are responsible for donating the amount to the charities of their choice.
The third pillar of Islam, Zakah (sometimes spelled Zakat) is universally recognized among the faithful as an obligation--usually stated as 2.5%--that every Muslim must pay on assets above a minimum threshold if held for a full lunar year.
Many Muslims choose to pay their Zakah during Ramadan, a month of fasting, worship, and giving, which began this year on June 18. For this reason, Azzad calculates annual charitable amounts for its wealth management clients during this month.
Why Zakah Matters
Zakah is an important part of maintaining the Islamic ideal of social justice and wealth distribution in society. Instead of a "winner-take-all" approach to economics, Islam mandates that Zakah be assessed on accumulated wealth in order to encourage the free flow of capital so as to avoid the concentration of resources among a very few. Importantly, Zakah is not a tax on income, targeting instead wealth and savings that can be put to more productive use in society. The notion of a global wealth tax has been advocated in academic circles in recent years as an antidote to rampant inequality and the growing gap between rich and poor.
Muslims who are able to are strongly encouraged to give charity voluntarily according to their means in addition to the obligatory Zakah.
Azzad also calculates annual purification amounts for clients and shareholders. Like Zakah, purification is one of Azzad's Seven Tenets of Halal Investing, and refers to the Islamic concept of giving away unintended earnings from impermissible sources. While the firm abides by strict ethical guidelines for investing, as with any investment, it is possible that some stocks will earn an insignificant percentage of impermissible income (less than five percent of revenues). Azzad calculates that amount on a per share basis, accrues it, and encourages clients to give it away to charity.
Purification amounts are subtracted from net assets prior to determining an exact figure for Zakah.
Azzad follows best practices and guidelines issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). AAOIFI is a consortium of Islamic scholars who convene to issue guidelines on halal investing and other financial matters. AAOIFI Standard Number 21, which outlines the principles of Islamic investing and includes specific guidance on Zakah and purification, is considered the authority for Islamic financial services firms.
About Azzad Asset Management
Since 1997, Azzad Asset Management, investment advisor to the Azzad Funds and sponsor of the Azzad Ethical Wrap Program, has provided investment services designed to help clients enjoy optimum performance without compromising their values. Azzad is a member of the Forum for Sustainable and Responsible Investment the Accounting and Auditing Organization for Islamic Financial Institutions, and the Interfaith Center on Corporate Responsibility. The firm is a registered investment advisor based in Falls Church, Virginia.
Please consider the Funds' objectives, risks, charges and expenses carefully before you invest. The prospectus contains this and other important information. For a hard copy, please call 888-350-3369. Read the prospectus carefully before investing or sending money. The Azzad Funds are self-distributed. Azzad Asset Management serves as the Investment Advisor.
SOURCE Azzad Asset Management